Verizon slashes 7000 jobs

Jessica Hall

SCOTTSDALE: Verizon Communications said on Wednesday it cut 7,000 union jobs,

or 2.7 percent of its work force, and added fewer-than-expected wireless

customers in the fourth quarter.

The company also said it is in "no rush" to proceed with the

initial public offering of its Verizon Wireless joint venture, citing weakness

in wireless stocks and the collapse of a deal to buy wireless licenses.

New York-based Verizon, like other Baby Bells, has been expanding into data

and wireless services to fuel new growth and offset declining sales of

traditional telephone services. Verizon reaffirmed its full-year 2001 financial

forecasts. In the fourth quarter, Verizon's growth in long-distance telephone

and high-speed Internet customers matched or beat Wall Street expectations.

Its wireless subscriber growth, however, fell short of analysts' forecasts,

stoking investors' fears that the industry was slowing, and pushing wireless

stocks lower for the fourth straight trading session.

Shares of Verizon Communications closed off 92 cents, or almost two per cent,

at $48.88 in trading on the New York Stock Exchange. The stock has outperformed

the North American Telecommunications Index by about 21 percent since the start

of last year.

Verizon cutting costs, shifting revenue focus



As part of its ongoing effort to cut costs in its slower-growing local telephone
businesses, Verizon offered an end-of-year buyout plan in December that was

accepted by 7,000 hourly, union workers.

It did not elaborate about the cost of the buyout program or severance

packages. Verizon previously cut about 7,500 jobs in the first three quarters of

2001 and had about 256,000 workers as of Sept. 30.

"We've already taken the force reductions up front" to cut costs

and help shift the company's focus to wireless and data services, Verizon

co-chief executive Ivan Seidenberg told the Salomon Smith Barney 12th Annual

Entertainment, Media and Telecommunications Conference in Scottsdale, Arizona.

"We're now transforming revenues to find new sources of growth."

Verizon said it continues to expect adjusted diluted earnings per share of

$3.00 to $3.03 for 2001, excluding special items. This compares to $2.91 for

2000. Analysts on average were expecting $3.01, according to Thomson

Financial/First Call, with estimates ranging from $3 to $3.07.

The company still expects revenue growth of 4 percent to 5 percent from the

$64.71 billion reported a year ago.

The 2001 guidance includes the previously announced costs to repair networks

damaged by the Sept. 11 attacks in New York and Washington. It will take a

charge in the fourth quarter that is comparable to the 3-cents a share charge in

the third quarter. Verizon plans to report its full 2001 results on Jan. 31.

Long distance and data shine; wireless falters



Verizon said it had about 7.4 million long-distance customers at the end of the
year, 51 per cent more than a year ago, and more than its target of 6.9 million.

Verizon is the nation's fourth-largest long-distance telephone company.

Verizon also ended the year with about 1.2 million digital subscriber line or

data customers, which met its expectations and was more than double the

customers at the end of 2000.

Patrick Comack, telecommunications analyst with Guzman & Co., blamed the

stock's weakness on investor disappointment with the results at Verizon

Wireless, its joint venture with Britain's Vodafone Group Plc.

Verizon Wireless, the nation's No. 1 wireless firm, added only 715,000 new

customers in the quarter, less than the 752,000 customers it added in the third

quarter. This fell short of analysts' estimates, which ranged from 900,000 to

1.1 million net new customers.

"These results add to a long list of negative data points in wireless

that have emerged in recent days, further confirming widespread softness in

wireless," Tim Luke, analyst with Lehman Brothers, said in a research note.

This week, several smaller wireless firms said fourth-quarter subscriber

growth met only the lower end of expectations, while consumer electronics

retailer RadioShack Corp. reported a decline in cell phone unit

sales in December.

In 2001, the Wireless Telecommunications Index dropped 38 percent, compared

with a 13 percent drop in the Standard & Poors 500 Index. The weak

valuations of wireless telephone stocks was just one reason cited by Verizon,

which said it felt no current pressure to proceed with an IPO of Verizon

Wireless.

"The reasons behind why we wanted to do the IPO changed,"

Seidenberg. Verizon and other telephone companies bid $15.85 billion for

wireless licenses almost a year ago, but that sale was thrown into chaos.

A federal appeals court said the Federal Communications Commission (FCC)

could not repossess and reauction the airwaves from NextWave Telecom Inc. when

that company failed to make timely payments. A deal to distribute the NextWave

licenses collapsed when Congress failed to pass authorizing legislation by Dec.

31.

"Long-term, we believe a separate equity is reasonable for that

business. But in light of NextWave and current valuations, we're in no rush to

move forward," Seidenberg told investors at the conference.

(Additional reporting by Yukari Iwatani in Chicago)

(C) Reuters Limited.